Life insurance provides a death benefit payment to your beneficiaries. If you aren’t sure what life insurance beneficiaries are, continue reading. 

What Are Life Insurance Beneficiaries? 

A life insurance beneficiary is a person you’ve chosen to receive the money from your policy’s death benefit. All life insurance policies require choosing a beneficiary when purchasing the policy. You can choose whoever you want. Therefore, your beneficiary can be a child, spouse, family member, or anyone else. 

Types Of Life Insurance Beneficiaries

Life insurance policies allow you to choose primary and contingent beneficiaries. A primary beneficiary is first in line to receive money when your death benefit is disbursed. If your primary beneficiaries cannot be found at the time of your death, the money goes to the contingent beneficiary. 

When assigning your beneficiaries, it’s important to identify each beneficiary as much as possible, such as including their full name and Social Security number. 

Revocable Beneficiary vs. Irrevocable Beneficiary 

Life insurance policies either have revocable beneficiaries or irrevocable beneficiaries. If you own a life insurance policy with a revocable beneficiary, you can switch beneficiaries at any time without getting consent from the current beneficiary. If the policy has an irrevocable beneficiary, you must have consent from the current beneficiary before making any changes. 

Choosing Your Life Insurance Beneficiaries

When purchasing life insurance, choosing your beneficiaries is incredibly important. You should make the decision based on your values and financial circumstances. For example, if you have a spouse or children who rely on you for financial support, consider that they will need to replace your income after you die. Also, think about future expenses, such as college and medical bills. If you like, you can set your policy up to disburse the death benefit in portions based on time or events. Some people choose to put their death benefits into a trust managed by a third party to ensure that funds are used appropriately after their death. 

Changing Your Beneficiaries

There are many reasons to change your beneficiaries. For example, the birth of a child may encourage you to make them the beneficiary instead of a family member or friend. Likewise, marriage and divorce can change how you think about how you should handle your assets following your death. 

Get Help Choosing Your Beneficiaries

If you work with an insurance agent to find the perfect life insurance policy, you can also turn to them when you need help choosing your beneficiaries. The talented agents at Magnolia Insurance Agency have helped many individuals find coverage, and they are ready to help you too. To get started with a free quote on life insurance in your area, give us a call at 770-213-5171.

 

Life Insurance / By Magnolia Insurance Agency